INSIGHT: New political formula in Congress for US chemistry

18 November 2010 14:31  [Source: ICIS news]

By Joe Kamalick

New field of play in US Congress for chemical sectorWASHINGTON (ICIS)--Now that the dust has settled in the wake of the US national elections on 2 November, the US chemicals industry is getting ready for a new political field of play on Capitol Hill, a game change that could affect a broad range of issues.

The industry has an opportunity to make major progress on key regulatory and energy issues with the new 112th Congress that will convene in January, according to Cal Dooley, president of the American Chemistry Council (ACC).

He told a press conference this week that the national vote that gave Republicans majority control of the House and swept more Republicans into the Senate “will have some bearing on how we continue to advance our industry’s priorities”.

Some bearing, indeed.

Dooley said that his trade group will work with the new Congress to advance safety and craft other policies “that will allow the chemicals industry to remain at the forefront of developing technology, advancing our economy and ensuring that we maintain jobs and our industry’s international competitiveness”.

Toward that end, he said, the ACC and its member firms are committed to getting reform and modernisation of the Toxic Substances Control Act (TSCA), the principal US statutory programme for regulation of chemicals in commerce.

That 34-year-old statute has not been substantially revised since its enactment in 1976. Legislation proposed by Democrats in the US House and Senate last year came under heavy chemical industry criticism as being draconian.

“There has been speculation that with significant Republican gains in the House, Senate and in state legislatures, that the ACC will back away from its commitment to modernise TSCA,” Dooley said.

“But we remain committed to having TSCA reform as one of our highest priorities,” he said.

With the new balance of power and politics in Congress, the industry has an opportunity to help shape a TSCA reform bill much more to its liking and one that could give the sector and its downstream customers a sense of certainty and dependability in chemicals controls that could last decades.

A TSCA rewrite that emerges from the new Congress in 2011 or 2012 would be considerably different from the Democrat-sponsored reform bills of this year that Dooley termed “extreme”.

Those bills, he warned, “would have stifled the ability of the US chemicals industry and industries that use our products to be competitive internationally”.

Dooley indicated that Democrats in Congress and environmental groups had been unwilling over the past year to meet industry concerns halfway on TSCA reform.

“We were disappointed that we didn’t have an opportunity to have a constructive engagement to move that legislation to some middle ground,” he said, adding that environmental groups “were not willing to make accommodations”.

“We hope in the next Congress that we can create a different dynamic, engage the NGOs [environmental groups], Republican leaders and work with Democrats who are committed to advancing TSCA reform that embodies our principles and those of the EPA to ensure the safety of chemicals in commerce,” Dooley said.

Dooley, a former seven-term Democrat member of the House, also said that the council supports a proposal by Senator Jay Rockefeller (Democrat-West Virginia) to suspend for two years the Environmental Protection Agency’s (EPA) plans to begin on 2 January regulating and limiting emissions of greenhouse gases by industrial facilities.

He said EPA’s controversial plan to begin restricting carbon dioxide (CO2) and other greenhouse gases “would have significant economic consequences on the chemicals sector, industry in general and the nation’s economy”.

“It is appropriate to delay EPA’s action in order to give Congress more time to act on climate change matters,” he said.

Republicans set to take control of the House in January have promised to deny funding to EPA for its greenhouse gases plans if Rockefeller’s bill or other legislative steps to block the EPA should fail.

Dooley also voiced concern about EPA’s plans to impose much more strict emissions controls on industrial boilers. The agency’s plan to impose “maximum achievable control technologies” (MACT) requirements on industrial boilers used for power, heat or processes is known as the Boiler MACT - and is widely opposed by industry.

“As proposed, the Boiler MACT is so onerous as to impose some $20bn [€14.8bn] in new capital costs on industry overall, and in the chemicals sector almost a $4bn hit,” Dooley said.

The Boiler MACT rule, EPA’s plans to restrict industrial emissions, and other established or pending federal regulations pose a threat to continued development and expansion of US industry, Dooley argued.

He noted that with EPA’s greenhouse gases (GHG) mandate, industries contemplating major upgrades to existing facilities or new plant construction face a succession of fast-approaching compliance deadlines and shifting rules that greatly discourage improvements and new capacity additions.

“I recently visited with two of our CEOs who both had made proposals to their boards on developing new capacity,” Dooley said. “They did side-by-side comparisons of putting the new plants in China or here in the US, and the costs to make each investment were identical.”

“But the decision in both cases was to go to China because of uncertainty about the ability to get the required US permits to get those facilities built and brought online quickly to meet developing demand,” he said.

“Timing is so important, and when you see GHG and Boiler MACT regulations that create such long-term uncertainty, they are an impediment to investment and creating jobs here,” he added.

He said the new Congress also would offer “an opportunity to get bipartisan support for a more comprehensive energy proposal”, including measures to “fully develop our domestic energy, offshore and onshore, along with alternative and renewable energy sources”.

Many in the US energy sector and among process industries and other manufacturing sectors have accused the Obama administration of maintaining a de facto ban on offshore drilling in US waters of the Gulf of Mexico and elsewhere. Some in Congress and the Obama administration also seek restrictions on hydraulic fracturing (fracking), the drilling and production technology essential to development of shale gas reserves.

“We have at this point a development in domestic energy that we have not seen in 50 years,” Dooley said, referring to the greatly expanded natural gas resources previously inaccessible in deep shale rock formations.

“One of our highest priorities in this country is to establish energy security and to reduce our dependence on imported oil,” he said, “and we see a game-changer here with our ability to capitalise on what is estimated to be a 100-year supply of natural gas in shale deposits.”

“We are focused on ensuring that we have appropriate federal policies to protect the environment, but also to allow us to capitalise on this significant energy source,” he added.

US petrochemical producers and downstream chemical makers are heavily dependent on natural gas as a feedstock and energy fuel. In addition, the industry is a major consumer of electric power, which in the US is increasingly generated by natgas.

With domestic gas supplies abundant and reasonably inexpensive, US chemical makers have a competitive edge in the global market compared with overseas chemicals producers that are generally dependent on higher-cost naphtha feedstock.

In addition, he expressed hopes that in the new Congress - or even the remaining weeks of the current 111th Congress - legislators will extend the existing Chemical Facility Anti-Terrorism Standards (CFATS) largely as-is for several years if not permanently.

He indicated that there is little prospect for major changes to the four-year-old CFATS programme, and that efforts by some in Congress to impose a federal mandate for inherently safer technology (IST) as a site security measure would not come to fruition.

($1 = €0.74)

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By: Joe Kamalick
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